Hayek Turns 100; D. Boudreaux

I was deliriously happy with my newfound intellectual friend, Milton Friedman. Introduced to Hayek's Works One afternoon, after reading something or other by Friedman, I wandered in to Bill Field's office-a place, incidentally, where I was always welcome-and announced that Friedman must be the world's greatest living economist. "Nope. In my opinion Friedman is the world's second greatest living economist," Bill replied matter-of-factly. "Second greatest?" I sputtered. I didn't believe what I'd just heard. "Who is it?" I asked. "Which living econo4 mist can possibly be greater than Friedman?" The name came. It was the first time I'd ever heard it. "Hayek. EA. Hayek." The name meant nothing to me. "Never heard of him," I responded. "Here," Bill said. "Take this book and read chapter four. It's an article entitled "The Use of Knowledge in Society."You haven't studied economics long enough to grasp it all, but give it a try." Bill lent me his copy of Hayek's 1948 book Individualism and Economic Order.

That night I read "The Use of Knowledge in Society," an article that originally appeared in the September 1945 issue of the American Economic Review. Bill was right; I grasped only very little of it. But I did grasp the main point that markets allow everyone to benefit from everyone else's knowledge. This insight was so pro found that I knew right then that I had before my eyes the product of a mind so deep and so wise that I could never call myself an econo mist without knowing the full range of this man's works. "Do you understand what Hayek says in that article?" Bill asked the next day. He and I then proceeded on the first of what became countless afternoons of reflecting upon Hayek's work. Later, Bill introduced me to the writings of other luminous economists-~ T. Bauer, James Buchanan, Israel Kirzner, Lud wig von Mises (Hayek's teacher), Joseph Schumpeter. I relished their works; I learned from them all. But to this day, Hayek remains for me the premier economist of this century.

Hayek's Revolutionary Ideas Even in the late 1970s-still active and more than a decade away from his death in 1992-pictures of Hayek revealed a very old man. Here, after all, was a man who once challenged Keynes for the position of most prominent economist of the 1930s. Here was a scholar whose most famous book, The Road to Serfdom, was published fourteen years before I was born. And yet whenever I read his words, I felt understanding being poured lavishly into my mind. These weren't the words of an old man, a man whose time had long ago passed. No, these words conveyed deep and timeless insights into the nature of economics, law, and politics. These were revolutionary words, for to understand Hayek is to understand not only that government cannot improve upon the operation of free markets, but also that gov ernment cannot even be relied upon to supply money and law-the very stuff that most economists unthinkingly assume can be sup plied only by the state. Moreover, Hayek's explanations of government's inherent limita tionsand of the market's marvelous ability to peacefully coordinate human activity into a productive powerhouse-are all grounded upon enduring truths rather than upon clever algebra or bumper-sticker maxims.

Finding Hayek was, for me, finding the most superb intellectual guide that I could dream of. By my junior year I'd already devoured sev eral of Hayek's books and essays. It was then that I tackled what I still regard as his finest work, the three-volume Law, Legislation and Liberty. In this work, Hayek most clearly and fully develops his idea of spontaneous order. In Law, Legislation and Liberty, Hayek also explains why common-law methods of law making are far better than legislative methods. To this day, following Hayek's example, I cannot bring myself to use the word "law" to describe legislation. The latter is fundamentally distinct from the former, 5 and, because of Hayek's influence, I believe that our loose habit of calling legislation "law" gives to legislatures an authority that they do not deserve. Legislators are not law makers; if accuracy is to be served, far better to call legislators "law breakers" rather than "lawmakers."Legislationdisruptsthe common law rules that embody patterns of expecta tions built into the law over the years and through long practice. And why do legisla tures upend this law? To plunder the political ly weak for the benefit of the politically strong.

Hayek wrote enduring treatises in econom ics and political and legal philosophy. But he also wrote short, laser-like articles focused on dispelling prevailing nonsense. One of Hayek's best-known articles of this kind is his 1961 answer to John Kenneth Galbraith's notion of the "dependence effect." Galbraith argued that in modern society consumer wants are created by advertising. Hence, because these wants are artificial, the market ought not to be applauded for satisfying them. Hayek skewered Galbraith's argument, pointing out that nearly all of our wants with or without Madison Avenue-are greatly influenced by our cultural environment. There is nothing unique or sinister about Madison Avenue that renders as unworthy of satisfac tion the desires that it helps to shape. Indeed, said Hayek, far better to have lots of produc ers use advertising to compete for consumer patronage than to have government coercing people to spend their incomes according to the fancy of the political elite.

On May 8 I will celebrate-along with all friends of liberty and truth-the centennial of Hayek's birth. First I'll call myoid professor, Bill Field, and thank him again for introduc ing me to Hayek's works. Afterward, I'll re read "The Use of Knowledge in Society" and reflect on the ocean of knowledge that this one Austrian-born British citizen contributed to the cause of human freedom. Happy birthday, Professor Hayek. 0 Hayek Made No Contribution? It Just Ain't So! "[I] f one asks what substantive contributions [F. A. Hayek] made to our under standing of how the world works, one is left at something of a loss. Were it not for his poli tics, he would be virtually forgotten." This assessment was offered up late last year in the online magazine Slate by Paul Krugman, 1991 winner of the prestigious John Bates Clark Award. A few weeks before Krugman wrote that, Gene Epstein, economics editor of Barron s, profiled this Yale-bred, MIT-based economic theorist. Epstein's article was largely positive and wholly respectful. But in a mildly critical tone, Epstein wondered if Krugman hadn't committed an error of omission. His writings on recessions seemed to suggest that he knew little or nothing about Hayek's theory of the business cycle, a theory built on the cumula tive efforts of Carl Menger, Eugen von Bohm Bawerk, and Ludwig von Mises. Krugman conceded that he wasn't familiar with the Austrian theory.